Don't Roll the Dice on GameStop

With meme stocks like AMC and GameStop back in the headlines, enjoying meteoric gains of 75% yesterday and pushing yet higher today, it can be tempting to jump on the bandwagon and try to make a few quick bucks before the current frenzy dies.

Especially for those who missed the last rallies in 2021.

But if you leave these stocks alone, you're actually the smart one. As Warren Buffet likes to famously say, "Stick to what you know." His stance is always, "I just need to know how a business makes its money. Once I know that, I can understand the business and determine if it is worth owning."

That's really key when understanding why it is so dangerous to play along in something like these meme stocks. They aren't rallying because these are solid companies making massive profits with strong fundamentals to back up their share prices and the current surges. They are rallying because the same man who fueled the last big surge has resurfaced for a second round of squeezing the shorts.

In other words, the rally won't hold and when the smoke clears the same as it did last time, it will be a swift and strong pullback, and the reality is that most people won't get out soon enough before their money is all gone.

It's gambling, pure and simple. Something that is never appropriate to do in the stock market. 

It's that temptation to wonder, "But what if it jumps another 50% today?" That's the same mentality of someone sitting at a slot machine wondering, "What if the very next pull is the one that hits the jackpot?" 

I'm a bit of a seasoned guy. I feel like I could smartly navigate the rallies and make some money. But it's just a game I refuse to play—because it doesn't make sense. It defies all of the logic I have learned over the years regarding share prices and why stocks move. Or more importantly, why they should move.

If it doesn't make sense, I'm going to leave it alone. 

Granted, some part of it makes sense. For example, we know that the short positions of GameStop were around 24% of the total of outstanding shares. So basically, buyers of the stock are running up the price through a frenzy of buying essentially forcing the short sellers to have their short positions squeezed and forcing them to sell their shorts to cover their positions.

But again, it's an artificial move. There's nothing to back up the share prices. Therefore, the prices are doomed to fall back sharply. The question is exactly when, and no one, even the most seasoned of investors, can time the markets.

I say hold onto your money and continue putting it into long-term investments that make sense. Like I said, it is tempting. Some may experience a sense of FOMO. But it's a fool's game to be sure. And the old saying that a fool and his money will soon be parted holds very much true in this case.

If one is going make a play, you have to consider it in the same way a responsible gambler would consider it. "This is money I can afford to lose and that I am willing to wager knowing I may walk away empty handed."

And, "I'm okay if I walk away empty handed." Because more people will likely walk away with nothing than will cash in on a big prize.

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© 2024 Jim Bauer

This blog post is for informational or entertainment purposes only and does not substitute for seeking advice from a licensed professional before making any investment decisions. 

You Should Be Playing The Stinking Lottery

Look, I will be the first to tell you. Yes, indeed, playing the lottery is most of the time a complete and utter waste of money. And anyone who has followed me knows all too well that I don't like to waste money.

But, there is still that chance, however slight, that you could walk away with millions upon millions of dollars if you play the lottery.

I always look at it in the simplest of terms. The dollar or two I spend here and there playing the lottery is a drop in the bucket mostly, and there are many things I spend money on that are a total waste of money even if it does not seem like it.

Like being out running around taking care of errands, for example, and buying a 20 ounce bottle of Coke because I happen to get thirsty. How much is that 20 ounce bottle of Coke, folks? It's about $1.59.

But I am getting a bottle of Coke, you say. I am getting a VALUE for that bottle of Coke. That Coke, unlike that lottery ticket that will most likely lose, provides no value unless I win. But so long as I get to drink the Coke, I win.

Nope. Hear me out, here.

You overpaid for that 20 ounce bottle of Coke because you could have bought a 12 pack of cans, for example, for about $4. You would have gotten 144 ounces of Coke doing it that way. Your ultimate cost for 20 ounces of Coke, buying the 12 pack, would have only been 56 cents. You paid $1.03 more for that bottle of Coke than you needed to.

You WASTED over $1. And what's more, you probably would never have felt that way about it. To you, you got your Coke, and you paid a fair price, all is good.

At the end of the day the simplest fact is that someone has to win the lottery. Most likely, yes. It is true. It will NOT likely be you. But it most certainly will not be you if you don't have a ticket in your hand.

The odds may be totally against you to win anything significant by playing the lottery. But technically the odds are very much in your favor that you will pay more for a bottle of Coke than a 12 pack of cans.

I'd spend that extra $1 on a chance at winning millions any day over having a quick, refreshing, overpriced bottle of Coke.

I think you should too.

Michigan Has A Powerball Winner

If there's one question I think most people ponder at least a few times in their lives, it is the question of what would one do if they were lucky enough to win the lottery? I know this is a question I have pondered more than a few times. One idea I have thought about is a way to pay it forward in a way that helps out hard working people. Working charity is the term I like to use for this.

One woman in Michigan has the lucky luxury to ponder this question in real time after realizing that she was the single winner of the most recent Powerball jackpot worth $310.5 million. She chose the cash option and after taxes took home $140 million. Not at all bad for a simple $2 investment.

She was having a bad day at work, which made the win especially more fun to hear about.

We all have those moments at work, or other times in our lives when we are simply fed up. We've had enough. Most of the time when that happens I simply pay myself to sort of buy myself out of my situation. Granted, it's not really what's happening. But in my mind, adding money, for example, to my investment portfolio after a bad day at work feels like I just might be accomplishing something.

Sometimes I'll even buy an extra lottery ticket.

I say extra because if there is one thing about me, it is that while I don't intend to ever actually win the lottery, I do intend to at least have a shot at winning, and that's not going to happen if I don't have a ticket in my hand.

Of course I wish the big win would have come my way. But somebody has to win, and even if it is not me, I like having at least the opportunity.

Congratulations to the latest Powerball jackpot winner.

Buffet At The Wynn in Las Vegas

I'll admit that the buffet at the Wynn in Las Vegas, Nevada is a bit pricey at nearly $40. Though, I have to say it is one of the better buffets I have had to date. If you happen to be visiting in Las Vegas, a trip to the Wynn for their buffet is a must-do to be sure.

Each station was a practical gourmet lover's dream. The buffet had everything. Red snapper, mahi mahi tuna, salmon, crab legs, peeled, ready to eat shrimp. There were lamb chops, cooked the way you like them, and prime rib that was ever so tender and juicy. Braised lamb, braised veal, fabulous thinly cut pork chops that were just amazing.

Even the vegetables were to die for. Specifically, the grilled asparagus was absolutely mouth-watering and fantastic. And of course, the waitstaff was very helpful, attentive and courteous as well. I don't usually generally feel a need to tip at a buffet, but the service here was exemplary to be sure.

The casino at the Wynn is beautiful as well, though for me, gambling there was not something I was entirely interested in. Call me cheap, but I like an abundance of penny slots. I'm not in Las Vegas to make money, I'm just there to have fun, and the machines at the Wynn seem to take money a bit more quickly than the other casinos, and they have less penny slots.

All in all an experience well worth it at the Wynn.

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